Who’s Holding the Bag?

Bill Miller from Legg Mason, Inc. [[LM]] is, owing more than 79 million shares of Freddie Mac [[FRE]] .

If the Government cheese makers decide to nationalize Fannie and Freddie, a whole mess of low IQ money managers, who erroneously control billions of dollars worth of investors money, will be annihilated.

Here are some notable holders of Fannie Mae [[FNM]] , in dollars:

Fidelity: 476 million

Citigroup Inc. [[C]] – 376 million

Barclays PLC (ADR) [[BCS]] – 344 million

Merrill Lynch & Co., Inc. [[MER]] – 329 million

State Street Corporation [[STT]] – 274 million

Pzena Investment Management, Inc. [[PZN]] – 170 million

T. Rowe Price Group, Inc. [[TROW]] – 138 million

Janus Capital Group Inc. [[JNS]] – 76 million

Here are some notable holders of Freddie Mac [[FRE]] , in dollars:

Legg Mason, Inc. [[LM]] – 400 million

Pzena Investment Management, Inc. [[PZN]] – 195 million

Citigroup Inc. [[C]] – 169 million

Barclays PLC (ADR) [[BCS]] 155 million

Fidelity- 130 million

Morgan Stanley [[MS]] – 125 million

State Street Corporation [[STT]] – 125 million

Here are some notable holders of SLM Corporation [[SLM]] , in dollars:

Barclays PLC (ADR) [[BCS]] – 317 million

Fidelity- 330 million

T. Rowe Price Group, Inc. [[TROW]] – 290 million

Goldman Sachs Group, Inc. [[GS]] – 246 million

Aside from the above names, Dodge and Cox, Lord Abbett and a variety of mutual fund companies have massive exposure to FNM/FRE/SLM. What stands out, in my opinion, is little ol’ Pzena Asset Management, with their 650 million market cap, coupled with their obscene exposure to the financials. I can’t help but think, they are in serious trouble here.

So, I delved into their holdings and dug up some interesting, yet startling facts.

Those people are out of their minds. Aside from FNM/FRE, they have exposure all over the place. Here is a small list of stocks on their sheets, in dollars:

C– 776 million

Alcatel-Lucent (ADR) [[ALU]] – 688 million

Capital One Financial Corp. [[COF]] – 683 million

The Allstate Corporation [[ALL]] – 555 million

The Home Depot, Inc. [[HD]] – 548 million

Bank of America Corporation [[BAC]] – 503 million

Wachovia Corporation [[WB]] – 392 million

MS– 321 million

J.C. Penney Company, Inc. [[JCP]] – 298 million

Comerica Incorporated [[CMA]] 234 million

Lehman Brothers Holdings Inc. [[LEH]] – 187 million

Level 3 Communications, Inc. [[LVLT]] – 173 million

JPMorgan Chase & Co. [[JPM]] – 152 million

Conclusion: The managers from PZN are wildly insane, holding so many risky investments. I can understand taking down a few banks, in order to bet on a recovery. However, these guys have bet the franchise on it.

Essentially, if you want a super charged gamble on the banks, get long PZN. My guess, investors will continue to pull money out of their funds, effectively wiping them off the map—providing the financials continue to struggle.

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